The Week That Was

Global equity markets advanced 1.5% in euro terms last week as investor concerns around AI monetisation eased, while softer macroeconomic data reduced pressure on major central banks to tighten monetary policy further. The S&P 500 gained 1.8%, led by healthcare stocks following positive updates from AbbVie and Eli Lilly, alongside support from a broader market rotation.

European equities extended their winning streak to four consecutive weeks, rising 2.7%, with industrials the standout sector as Germany’s fiscal reform package provided a tailwind for defence spending. Global commodities were broadly flat in euro terms, with Brent crude holding close to pre-US/Iran conflict levels, while gold rose 2.2% after four consecutive weeks of declines. Global bonds were little changed overall, although comments from the Fed and ECB chairs at a policy conference in Portugal prompted swaps markets to scale back expectations for rate hikes.

Summary Economic Releases

The Week Ahead

Asian markets were broadly flat this morning as momentum from the AI-driven rally continued to fade. This was reflected in Hon Hai, a key server assembly partner for Nvidia, which rose by less than 1% despite reporting a 40% increase in quarterly sales. Oil prices edged higher despite OPEC+ members agreeing to increase production further next month. Elsewhere, President Trump discussed the war in Ukraine with Vladimir Putin ahead of Tuesday’s NATO summit. While no meaningful progress was reported, Trump indicated he would revisit the issue following a meeting with President Zelensky later this week.

Corporate news flow remains relatively subdued as markets move through a quieter period ahead of the Q2 earnings season, which begins in mid-July. Nevertheless, PepsiCo’s upcoming trading update will be closely scrutinised for signs of a recovery in its North American snacks business, which has faced pressure from consumer trade-down behaviour following inflation-driven price increases, as well as reduced demand linked to the growing adoption of GLP-1 weight-loss drugs.

SpaceX is set to join the Nasdaq 100 this week, although the impact is expected to be modest given its anticipated index weighting of less than 1%. Looking ahead, the US earnings season is expected to begin in the coming weeks, with consensus forecasts pointing to approximately 22% year-over-year earnings growth, supported by recent upward revisions across the Energy, Information Technology, Communication Services and Materials sectors. Earnings revisions in Europe have also turned increasingly positive and are currently running at their strongest level in two years.

In addition to ongoing geopolitical developments, macro updates will be the key driver of investor sentiment in the week ahead. This afternoon, US Services PMI is likely to remain in expansionary territory however order growth and prices paid are expected to have cooled slightly in June. Tuesday should bring confirmation that Eurozone investor confidence and Retail Sales rebounded to their highest levels since March as geopolitical tensions ease. On Wednesday, investors will parse through the first set of Fed minutes with Kevin Warsh as Chair to get a greater sense of policy direction on the go forward. ECB minutes will be released on Thursday and whilst it will likely point to an additional hike in September, weaker than expected inflation data is likely to soften policymakers resolve to hike beyond that. Inflation data will also be in focus in China where a decline to 1% YoY in June continues to highlight the weakness of domestic demand.

Opportunities this week:

• LVMH (Overweight PT €625 +26% Upside) – Lookahead to H1 results and Bloomberg survey data.
• L’Oréal (Overweight PT €410, +9% Upside) – Look-ahead to H1 results.
• Ryanair Holdings (Overweight, PT €30.50, +13% upside) – Update on recent newsflow.

Written by John Mullane, CIO, Cantor Fitzgerald Ireland

This is an extract from the Weekly Markets Report by Cantor Fitzgerald Ireland. For more detail on individual securities, or to discuss how we can support your investment needs, please get in touch.